EUR/USD Price Forecast: Pair Stalls Near 1.1750 as Strong Dollar and Oil Shock Point Toward 1.1600

EUR/USD – Dollar Safe-Haven Regime, Oil Shock Risk and the Path Toward 1.16

Macro backdrop: US–Iran escalation, oil above $70 and why it punishes EUR/USD

The dominant driver for EUR/USD now is geopolitics feeding directly into energy. Market-implied odds of a US strike on Iran by 31 March are around 60%, while Brent trades in the $71–72 range with clear room to extend toward $75–76 if that probability migrates closer to 100% and traders start seriously pricing the risk of supply disruption around the Strait of Hormuz. The probability of Hormuz being blocked is still under 50% across different horizons, which means a full-blown energy shock is not fully in the price. That asymmetry matters: higher crude prices and incomplete risk pricing are a textbook bullish regime for the dollar and a structural headwind for EUR/USD, because the euro area is an energy importer while the US is much less exposed.

Spot picture and valuation: EUR/USD in the mid-1.17s but still not cheap

Spot EUR/USD trades around 1.1750–1.1760, just above the recent monthly low near 1.1740 and well below the highs above 1.19 seen earlier in the year. Even after this move, short-term fair-value models that focus on rates and equities still show the pair roughly 1% richer than where fundamentals would place it if oil were ignored. That means part of the risk premium for Iran and energy is still missing. With crude already above $70 and geopolitical risk skewed towards further escalation, that valuation gap leaves space for further downside: a sustained oil move into the mid-$70s, combined with higher strike probabilities, can realistically drag EUR/USD down into the 1.16 area.

US dollar side: jobless claims at 206K, solid GDP and a patient Fed support USD

On the USD side the macro data are reinforcing the move. Initial jobless claims recently fell to about 206,000 for the week, from roughly 229,000, beating expectations around 225,000 and underlining a tight US labour market. Fourth-quarter GDP is tracking near 2.7–2.8% annualised and core PCE inflation for December is expected around 0.3% month-on-month. That mix is not compatible with an imminent, aggressive rate-cut cycle. Minutes of the last FOMC meeting show most policymakers comfortable holding rates steady, with only a small minority starting to consider cuts later on. Markets have been forced to take a meaningful part of the earlier easing expectations out of the curve, and that repricing directly underpins the dollar.

Dollar index structure: DXY above 97.6 with 98.5 as the next ceiling

The US dollar index is trading around 97.9–98.0, just under an immediate barrier near 98.08 after bouncing from lows near 95.54. Price has recovered and held above the 0.618 Fibonacci retracement around 97.61, which now acts as a key pivot. The 50-period EMA on the 4-hour chart is clustered near 97.20, providing dynamic support, while the 200-period EMA sits higher around 98.47 as the next strong resistance. The RSI around 60 indicates persistent bullish momentum without extreme overbought conditions. As long as DXY stays above 97.6–97.7, dips are more likely to be bought than aggressively sold, which is a negative backdrop for EUR/USD.

Euro side: PMIs above 50 cannot offset rate-cut bets and energy vulnerability

On the EUR side, data are not disastrous but they do not compensate for the structural weaknesses. Flash eurozone composite PMIs are expected around 51.5 after 51.3, indicating modest expansion but nothing resembling a growth boom. At the same time, rate-cut expectations for the European Central Bank have been revived; the market is increasingly comfortable with the idea that the ECB will start easing earlier and more decisively than the Fed. That interest-rate profile alone weighs on the single currency, and once higher oil is layered on top it becomes more problematic. Every additional $5 move higher in Brent weakens the euro area’s terms of trade and worsens the inflation-growth mix, precisely the kind of shock that hurts EUR more than USD.

Safe-haven rotation: why EUR loses to USD when the shock is oil, not equities

The dollar’s safe-haven role has changed compared with earlier cycles but it still behaves consistently when the underlying shock is energy. When stress is driven by equities alone, flows can fragment across safe-haven currencies. When stress is driven by a crude spike and Middle East risk, the US looks relatively insulated compared with large net energy importers such as the euro area and Japan. That is why both EUR and JPY tend to underperform USD in oil-driven risk-off episodes. With oil already above $70, implied probabilities of US–Iran confrontation elevated and Hormuz risk only partially priced, this regime is firmly in place. It is directly visible in EUR/USD, which is sliding even while eurozone PMIs stay above 50.

Technical damage: 1.1780–1.1806 flips from support into resistance on EUR/USD

Technically, EUR/USD has broken an important support cluster. The pair has moved below the 1.1780–1.1770 band that previously combined the 200-period simple moving average on the 4-hour chart with the 61.8% Fibonacci retracement of the upward move from the January low. That area, along with the horizontal shelf just above 1.1800, has now turned into resistance. Overhead, the 50% retracement sits near 1.1828, and 1.1806 marks another former support that has turned into a cap. The 50-period EMA on the 4-hour chart is rolling over around 1.1850, while the 200-period EMA is compressed just below that, around 1.1800–1.1810. This entire 1.1780–1.1830 zone is a dense resistance block, and any bounce into it will run into layered supply.

Momentum and the 200-day SMA: oversold, but sellers still control the trend

Momentum gauges confirm that the move is mature but not necessarily finished. On intraday charts, MACD remains below its signal line and under zero, although the negative histogram is starting to narrow. The RSI on EUR/USD is around 29–30, formally oversold. In isolation that would argue for a corrective recovery, but the broader structure matters more: the spot rate is trading below the 200-day SMA on the daily chart, and until the pair can reclaim and hold above that average, rallies are more likely to be used to add shorts than to mark a trend reversal. An oversold RSI in a strong dollar environment often signals “do not initiate fresh shorts at the exact low”, rather than “time to go long euro”.

Key levels: supports at 1.1742, 1.1672 and 1.1600; resistance stacked from 1.1780 to 1.1830

On the downside, the first important support is around 1.1742, effectively the current floor near Thursday’s low around 1.1740. A clean break below that area opens the door to the next zone near 1.1670–1.1675, which lines up with a prior consolidation band and a measured extension of the previous range. If geopolitical risk intensifies and crude pushes firmly into the mid-$70s, the next obvious destination for EUR/USD becomes the 1.1600 region, where the pair would finally look cheap relative to short-term fair-value metrics. On the topside, the 1.1780–1.1806 area is the first resistance pocket, followed by the 1.1828 retracement level. Regaining and holding above 1.1830–1.1850, including a sustained break back above the 4-hour 200-period SMA and the 200-period EMA, would be necessary to put sellers on the defensive.

Cross-checks from GBP/USD, CAD and gold confirm the EUR/USD bearish regime

Other markets are telling the same story. GBP/USD trades around 1.3470 on the 4-hour chart after losing key support at 1.3516 and breaking below its uptrend line from mid-January. The 50-period EMA near 1.3600 and the 200-period EMA around 1.3580 now act as resistance rather than support, mirroring the structural shift seen in EUR/USD. In contrast, the Canadian dollar is coping better because it is partially supported by higher oil; CAD behaves as a lower-volatility commodity currency with direct sensitivity to crude, so it does not weaken as aggressively as EUR against USD in this regime. At the same time, gold trades north of $5,000 per ounce and is testing resistance closer to $5,100, reflecting a classic risk mix of strong dollar plus strong bullion driven by geopolitical stress and a repricing of rate-cut odds.

Fundamental skew: resilient US data, cautious Fed and soft eurozone keep EUR/USD under pressure

The deeper fundamental skew remains straightforward. The US economy is growing around 2.7–2.8% annualised with jobless claims near 206,000 and core PCE near 0.3% month-on-month, which allows the Fed to sit tight. The market has been forced to climb down from aggressive easing expectations, and that climb-down is not yet fully reflected in EUR/USD pricing. The euro area, by contrast, is stuck with low trend growth, higher energy sensitivity and an ECB that markets expect to pivot earlier. When that interest-rate divergence is combined with an energy shock and visible military escalation risk in the Middle East, the structural direction for the pair stays lower.

Bias and stance on EUR/USD: trend remains bearish, 1.16 remains a realistic downside target

Putting the pieces together, EUR/USD trades in a regime where the dollar is supported by strong domestic data, a cautious central bank and a credible safe-haven role in an oil-driven shock, while the euro is constrained by energy dependence and earlier rate-cut risk. Technically, the pair sits below a thick resistance block at 1.1780–1.1830, below its key intraday moving averages and close to important support at 1.1740–1.1742, with follow-through levels at 1.1670–1.1675 and an extension toward 1.1600 in a full escalation scenario. The overall stance is bearish, with rallies into the 1.1780–1.1830 region more likely to be used to sell EUR/USD than to build sustained long exposure while oil holds above $70, strike probabilities stay elevated and US data continue to outperform.

That's TradingNEWS